BHP’s hand exposed in high-stakes poker

“Winner winner chicken dinner" is not an expression with which many Australians are familiar.

“Guys say winner winner chicken dinner when you win at a poker game, it’s an American expression," according to
BHP Billiton
chief ­executive
Marius Kloppers
.

Embarrassingly for BHP, fresh ­revelations from WikiLeaks suggest the phrase also aptly captures the clever hand BHP played in shaping Australian policy towards foreign takeovers when Chinese national aluminium group Chinalco was bidding for a major stake in
Rio Tinto
.

Mr Kloppers had explained the chicken dinner phrase in a profile in the AFR Magazine before those meetings, in which he also acknowledged there were some challenges in running the world’s biggest mining company from Melbourne.

Both the deep familiarity with poker and those perceptions of the somewhat fishbowl nature of his adopted city were evident in the less than guarded comments Mr Kloppers allegedly made to Mr Thurston.

In the latest WikiLeaks material reported in The Sydney Morning ­Herald and The Age newspapers exclusively, Mr Thurston recorded Mr Kloppers as saying that doing business in Melbourne was “like playing poker when everyone can see your cards". BHP would not comment on the views yesterday.

Whether or not, recognising the tenuous provenance of the Wiki­Leaks material, Mr Kloppers does think Melbourne is a small town – and those who know him say he doesn’t think that way – the colourful line reignited the long-standing rivalry between the two cities. To say nothing of concerns about BHP’s sway in Canberra.

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A WikiLeaks release last year said Treasurer
Wayne Swan
’s chief of staff told US embassy officials that BHP had outmanoeuvred Rio to orchestrate the Chinalco deal’s ­collapse. That cable from 2009 also had a card angle, albeit with a switch in the top dog at the table.

Mr Swan’s chief of staff allegedly told US officials “on several occasions that BHP has played its cards with consummate skill, in part due to the increasing marginalisation of BHP chief executive Marius Kloppers as BHP chairman
Don Argus
has taken the lead in lobbying".

“BHP has been lobbying extensively to block the deal, highlighting concerns about Chinese investment and the possibility that seats on the Rio board would give the Chinese representatives important insights into the producer side of the annual iron ore price negotiations," that cable said.

In the new material, Mr Kloppers is also reported to have offered to parlay insights for US intelligence.

“[Kloppers] complained that Chinese and industrial [Rio Tinto] surveillance is abundant and went so far as to ask consul-general several times about his insights into Chinese intentions, offering to trade confidences."

Mr Thurston noted that Mr Kloppers also appeared concerned about surveillance by the Australian government. “Kloppers even hinted about privacy concerns vis-a-vis the GOA [government of Australia]," the cable said.

Business figures yesterday said there were obvious concerns with confidential company-government discussions becoming public but that was now something they “had to get used to" with the WikiLeaks cache of material.

The business figures were more colourful on the Sydney-Melbourne slant to Mr Kloppers’ alleged views.

“What you do find is Sydney is ­definitely more international than Melbourne, you don’t get that insularity because there’s more expats at functions, a greater diversity, arts figures, not the same people," said one Sydney chief executive frequently in ­Melbourne.

“In Melbourne it does seem you see the same faces a lot, kids go to the same schools, so I think there is a bit of a fishbowl sense."

Melbourne business figures tend to put a different slant on that.

Media industry doyen
Harold Mitchel
l, a director of Crown who, like Mr Kloppers, knows something about gambling, says anyone doing business anywhere in the world “needs to be a good poker player".

“I travel all over the world and deal all over the world and all the research, furthermore, says this is a great city to play cards in," Mr Mitchell said. Roy Woodhouse, a director at Transfield and Charter Hall who straddles both cities, said there was an openness within the business community in Melbourne based on mutual trust.

“Melbourne operates on who you are and your reputation," Mr Woodhouse said, “Sydney operates on your last deal.

“Melbourne is a relatively small market at the top end, there is sharing of information on a confidential basis due to the ability to trust, which comes back to reputation. That doesn’t exist in the Sydney market because it is much more of a cut and thrust market . . . in Sydney it is all about the deal and reputation comes a distant second."

“One of the things I find about the city is that credibility is paramount," he said.

“We’re often comparing Sydney and Melbourne and I’ve found if you ring around half a dozen people in Melbourne and try to get precommitments for reasonably substantial amounts of money – say $5 million to $10 million – you know when it gets to the line you will get the money. I’m not sure that’s always the case in Sydney."

Industry Funds Management chairman Garry Weaven said Mr Kloppers was not describing the Melbourne he knew: “It doesn’t ­resonate with me." More likely, he said, BHP suffered, or benefited from, depending on the perspective, from being the biggest game in town.

“The point being, this is a gigantic company in terms of Australia, you would expect there would be a fair bit of public attention," Mr Weaven said.

“It would be a bit naive to think it wouldn’t be a topic in which the public have a great interest, that is inevitable when you are the size of BHP."

Mr Weaven said Melbourne’s corporate culture had changed over the past decade or so and was less of a small club than it was once. “There are tribes, there are more than one tribe, there is more than one circle."

“Your team members will know the cards you are playing," the part-owner of the Melbourne Victory soccer team said. “Melbourne people tend to work with other people on their side . . . there are certain groups that work together and certain groups that are on the other side all the time."

Others note corporate functions are simply better attended in Melbourne, such as Australia-Israel Chamber of Commerce events where companies are keen to secure ­Melbourne spots as attendance ­numbers are better.

The Melbourne corporate circuit is smaller and more focused and part of that is historical, particularly in resources. Australia’s resource wealth was built around the Collins House group of companies. BHP, CRA (the precursor to Rio Tinto), Woodside, Western Mining, and a legion of smaller resource companies were all based in Melbourne because that’s where the capital was.

Today, BHP is the only one left with a sizeable presence. Melbourne, too, still has a business club scene although it is not the force it was when BHP was headquartered in the “Black Stump" on William Street and had a regular lunch table at the Australian Club just over Little ­Collins.

“You still see senior executives and directors at the Aussie or the Melbourne Club – but you don’t see Marius," said one resource industry director.

He said another inevitable element of being located in Melbourne was the smaller airport: “Anyone who’s going to Canberra is always on QF804 at 7.20 in the morning, you run into them in the lounge. So you just know what’s going on."

Indeed, increasing numbers of CEOs choose to live in Sydney even when their business is in Melbourne, notably former Telstra boss Sol ­Trujilo and National Australia Bank’s
Cameron Clyne
.

More concerning, however, for all executives is corporate espionage, long a fact of life but increasingly sophisticated in the form of cyber crime. Indeed, one interpretation of Mr Kloppers’ poker line is in the context of BHP’s concern that it is spied on all over the world – even back home in Melbourne.

“State-sponsored electronic espionage is endemic these days," said one security adviser, and China was the country most frequently fingered – and particularly in regard to resource companies given China’s massive demand for raw materials.

So even Melbourne rivals London at the height of the Cold War, with Smileys lurking everywhere.

Mr Woodhouse does, however, have sympathy for Mr Kloppers’ concerns about industrial spying.

“Corporate espionage is a very ­different topic, that does exist and it is alive and well in business in ­Australia," he said.